Energy firms warned over poor customer complaints record

OFGEM has written to energy companies demanding they take action on poor handling of customer complaints.

The regulator’s chief executive has sent letters to the “big six” and smaller and independent suppliers about the “industry-wide failure” to handle complaints to an acceptable standard.

It follows research by Ofgem that found more than half of those who had complained - 57 per cent of domestic customers and 52 per cent of small businesses - were not satisfied with how their supplier handled the problem. In almost half of cases where the supplier considered the case resolved, the customer did not.

Ofgem said satisfaction with Npower and Scottish Power had fallen particularly markedly, from 36 per cent to 21 per cent and from 44 per cent to 20 per cent respectively, with only SSE managing to maintain levels of satisfaction found two years ago.

Earlier this year Ofgem opened an investigation into Npower’s “prolonged customer service failings”, the first under its new standards of conduct.

In today’s letter, Ofgem warned companies to improve the speed of resolving complaints, communicate better with customers during the process and be more proactive in finding a solution. The letter read: “The results are unacceptable. I am therefore drawing attention publicly to these findings to leave you in no doubt about the need to act quickly to improve matters.

“I expect you to provide a public response to the issues raised in this letter.” The regulator said many customers were now responding to suppliers’ poor service by switching, with almost one in two customers having either already switched or planning to do so. Ofgem chief executive Dermot Nolan added: “These satisfaction scores are frankly awful.

“Almost all energy suppliers need to improve their complaints handling as a matter of urgency. There are real business benefits to good complaints handling schemes, and it shouldn’t need a regulator to tell companies about the importance of this.

“Suppliers must now tell their customers what steps they will be taking to put things right. We are already formally investigating Npower about complaints handling and other customer service issues, and this should send a strong signal to all suppliers that, where necessary, we will take action.” Ofgem said it was planning to bring forward a survey of complainants.

Which? executive director Richard Lloyd said: “It shouldn’t need involvement from Ofgem for energy companies to get the basics right. We found energy companies have hit rock bottom, with woeful service and dreadful complaints handling.

“This situation has been going on for far too long and it’s little wonder that consumer trust is so low. Gillian Guy, chief executive of Citizens Advice, said: “Energy is a basic essential for every household so firms need to do everything they can do get their service right and if something does go wrong, do their utmost to fix it straight away.

Npower’s director of domestic retail business, Roger Hattam, said: “This research was undertaken in February, and since then we have made real steps forward in improving our service. For example, since June we have reduced the number of late bills by over 75 per cent and the number of complaints we received by nearly 30 per cent. These improvements have involved allocating 1,500 of our people to help resolve our problems and around £20 million of extra spend. This demonstrates how seriously we take improving our customer service.”